Peso nears 12-year low

The peso yesterday almost breached the P52 to $1 level, the lowest in almost 12 years due to strong corporate demand for US dollars.

The local currency closed at P51.98, 21 centavos lower from the previous day’s close of P51.77.

It was the peso’s lowest close since July 21, 2006’s P52.165.

Yesterday was also the peso’s fourth consecutive day of weakness. The peso was also the only currency in Southeast Asia to weaken.

The peso is the worst performing currency in the region this year, losing almost 4 percent to-date from its P49.93 close on Dec. 31, 2017.

Angelo Taningco from Security Bank’s Treasury Group said the peso depreciation was “largely due to strong corporate demand for US dollars.”

Taningco said foreign equity outflows may have contributed to the weakening of the local currency.

Emilio Neri, lead economist of the Bank of the Philippine Islands, said the peso moved lower from the US dollar “with corporate demand elevated given the pair’s recent move.”

“The dollar remained well-bid with corporates securing the greenback before the pair moved any higher. The pair touched the 52 handle before trading only slightly below that level for most of the session,” Neri said.

“There are lingering concerns on Middle East remittances falling after the Kuwait decision and trade gap widening further in 2018,” he added.

The Department of Labor and Employment (DOLE) on Monday officially imposed a total ban on the deployment of overseas Filipino workers (OFWs) to Kuwait, in pursuit of national interest and due to the series of reports involving abuse and deaths of OFWs.

Under the ban, OFWs both new hires and returnees, shall not be allowed to go to Kuwait.

Data from the Bangko Sentral ng Pilipinas showed that OFWs from Kuwait sent $735.24 million in remittances from January to November of 2017.

Regina Capital Development Corp., said the market “saw a bit of reprieve from the selling pressure experienced this month on the back of weaker trading volumes as the Chinese New Year holiday gets underway.”

“In line with this, US markets rose for the second straight session Monday, as investors began re-entering the market, bargain-hunting with signs of stability showing after the worst weeks for the US bourse in the last 2 years,” it said.

Broker First Metro Securities Brokerage Corp., meanwhile said investors should “expect light trading as major Asian bourses go on break for the Chinese lunar holiday” this week.

Most actively traded Now Corp. was down by P2.38 to close at P10.26.

SM Prime Holdings Inc. was up by P1.15 to P36.15. Bank of the Philippine Islands also closed higher, gaining P2.40 to P120.

Column of the Day

‘The Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq.) is a United States federal law known primarily for its main provision: Against bribery of foreign countries’ food management officials.’

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